The sale has increased Telenor’s Scandinavian mobile customer base by a healthy 37%, reaching a total of 5.6 million subscribers. It also gives Telenor roughly 1.5 million customers in Sweden, where Vodafone Sweden is the third-largest mobile operator with a market share of 16%.
For the year ending March 31, 2005, Vodafone Sweden posted revenues of approximately 703m euros ($850m) and EBITDA of approximately 141m euros ($170m). However, the unit was not profitable, and Vodafone decided that selling the unit would be a safer bet than battling on in a highly competitive and tightly regulated market.
When it announced it was selling the unit in October, it said corporate customers in the area were looking for carriers with a pan-Nordic network such as that which Telenor could provide, rather than Vodafone’s isolated Swedish operation.
Sweden has four mobile carriers, one mobile virtual network operator, and 20 service providers. With a population of just over 9 million, this translates to a highly competitive environment.
However, the country has 104% penetration rates for mobile phones, which means that growth prospects are drastically limited. Vodafone’s existing strategy is to concentrate on growing markets with lower mobile penetration, as can be seen with its purchases in Turkey, South Africa, India, and Eastern Europe.
